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Hyatt Hotels (H) Up 2.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Hyatt Hotels (H - Free Report) . Shares have added about 2.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hyatt Hotels due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hyatt reported solid second-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis.
Q2 Earnings & Revenues
During the second quarter, Hyatt reported adjusted earnings per share (EPS) of 46 cents, beating the Zacks Consensus Estimate of a loss of 1 cent. In the prior-year quarter, the company reported an adjusted loss of $1.15 per share.
Quarterly revenues of $1,483 million beat the consensus mark of $1,363 million by 16.5%. Moreover, the top line surged 123.7% on a year-over-year basis.
Operating Highlights
During the quarter, adjusted EBITDA came in at $255 million compared with $55 million reported in the year-ago quarter. Adjusted EBITDA margin increased to 30% in the second quarter compared with 17.9% reported in the year-ago quarter.
Segmental Details
Hyatt manages business through five reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising; and Apple Leisure Group Segment.
During the second quarter, revenues in the Owned and Leased Hotels segment totaled $331 million compared with $191 million reported in the prior-year quarter. The upside was primarily driven by improved demand across the portfolio. Owned and leased hotels’ RevPAR surged 140% from the prior-year quarter’s level. During the quarter, the average daily rate (ADR) was up 35.2% and the occupancy rate increased 30.8 percentage points from 2021 levels.
The segment’s adjusted EBITDA came in at $99 million during the first quarter compared with $12 million reported in the year-ago quarter.
During the quarter, total Management and Franchise fee revenues came in at $204 million compared with $93 million reported in the year-ago quarter. The metric rose sequentially from $135 million reported in first-quarter 2022.
In Americas Management and Franchising, RevPAR for comparable Americas full-service hotels (during the second quarter) surged 112% from the prior-year quarter’s level. While ADR increased 28.5%, occupancy rates increased 27.7 percentage points from the prior-year quarter’s number.
RevPAR for comparable Americas select-service hotels was up 55.2% year over year. ADR increased 31.3% and occupancy rates improved 11.6 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the first quarter came in at $117 million compared with $54 million reported in the year-ago quarter.
In ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels (during the second quarter) increased 0.8% from the year-ago quarter’s figure. ADR increased 6.2% year over year. However, occupancy rates declined 2.3 percentage points from the year-ago quarter’s number.
RevPAR for comparable ASPAC select-service hotels was down 22.6% on a year-over-year basis. ADR declined 4.5% year over year. However, occupancy rates fell 11.6 percentage points from the year-ago quarter’s number.
During the quarter, adjusted EBITDA came in at $6 million compared with $10 million reported in the year-ago quarter.
In EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR surged 239.9% from the year-ago quarter’s level. ADR increased 49.3% and occupancy rates rose 36.6 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the first quarter came in at $13 million against a loss of $1 million reported in the year-ago quarter.
In the Apple Leisure Group (or ALG) segment, adjusted EBITDA during the second quarter came in at $54 million compared with $56 million reported in the previous quarter. Solid demand for leisure destinations, coupled with increased airlift capacity and a favorable pricing environment, added to the upside. During the quarter, the ALG segment added 10 resorts (or 2,502 rooms).
Balance Sheet
As of Jun 30, 2022, Hyatt reported cash and cash equivalents of $1,955 million compared with $1,305 million reported in the previous quarter. Total debt as of Jun 30, 2022, stood at $3,804 million compared with $3,821 million as of Mar 31, 2021.
The company stated undrawn borrowing availability of $1,496 million under Hyatt's revolving credit facility.
Other Business Updates
Coming to hotel openings, 28 new hotels (or 5,510 rooms) joined Hyatt's system in the second quarter of 2022. As of Jun 30, 2022, Hyatt executed management or franchise contracts for approximately 550 hotels (or 113,000 rooms).
During the second quarter, the company made significant progress with respect to its $2.0 billion asset disposition commitment. The company completed sale agreements for assets (valued at $812 million) related to its owned and leased portfolio. The properties include Hyatt Regency Indian Wells Resort & Spa, Grand Hyatt San Antonio River Walk, The Driskill and The Confidante Miami Beach. On Aug 3, the company entered into an agreement with an unrelated third party for the acquisition of Hotel Irvine (for approximately $135 million). The company is optimistic to realize approximately $2 billion gross proceeds from the sales of real estate (net of acquisitions) by 2024-end.
2022 Outlook
For 2022, the company expects adjusted selling, general and administrative expenses between $460 million and $465 million. Capital expenditures are projected at approximately $210 million. Unit growth in 2022 is anticipated at approximately 6% on a net-room basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 752.63% due to these changes.
VGM Scores
Currently, Hyatt Hotels has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Hyatt Hotels has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Hyatt Hotels (H) Up 2.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Hyatt Hotels (H - Free Report) . Shares have added about 2.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hyatt Hotels due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hyatt Q2 Earnings & Revenues Beat Estimates, Rise Y/Y
Hyatt reported solid second-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis.
Q2 Earnings & Revenues
During the second quarter, Hyatt reported adjusted earnings per share (EPS) of 46 cents, beating the Zacks Consensus Estimate of a loss of 1 cent. In the prior-year quarter, the company reported an adjusted loss of $1.15 per share.
Quarterly revenues of $1,483 million beat the consensus mark of $1,363 million by 16.5%. Moreover, the top line surged 123.7% on a year-over-year basis.
Operating Highlights
During the quarter, adjusted EBITDA came in at $255 million compared with $55 million reported in the year-ago quarter. Adjusted EBITDA margin increased to 30% in the second quarter compared with 17.9% reported in the year-ago quarter.
Segmental Details
Hyatt manages business through five reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising; and Apple Leisure Group Segment.
During the second quarter, revenues in the Owned and Leased Hotels segment totaled $331 million compared with $191 million reported in the prior-year quarter. The upside was primarily driven by improved demand across the portfolio. Owned and leased hotels’ RevPAR surged 140% from the prior-year quarter’s level. During the quarter, the average daily rate (ADR) was up 35.2% and the occupancy rate increased 30.8 percentage points from 2021 levels.
The segment’s adjusted EBITDA came in at $99 million during the first quarter compared with $12 million reported in the year-ago quarter.
During the quarter, total Management and Franchise fee revenues came in at $204 million compared with $93 million reported in the year-ago quarter. The metric rose sequentially from $135 million reported in first-quarter 2022.
In Americas Management and Franchising, RevPAR for comparable Americas full-service hotels (during the second quarter) surged 112% from the prior-year quarter’s level. While ADR increased 28.5%, occupancy rates increased 27.7 percentage points from the prior-year quarter’s number.
RevPAR for comparable Americas select-service hotels was up 55.2% year over year. ADR increased 31.3% and occupancy rates improved 11.6 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the first quarter came in at $117 million compared with $54 million reported in the year-ago quarter.
In ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels (during the second quarter) increased 0.8% from the year-ago quarter’s figure. ADR increased 6.2% year over year. However, occupancy rates declined 2.3 percentage points from the year-ago quarter’s number.
RevPAR for comparable ASPAC select-service hotels was down 22.6% on a year-over-year basis. ADR declined 4.5% year over year. However, occupancy rates fell 11.6 percentage points from the year-ago quarter’s number.
During the quarter, adjusted EBITDA came in at $6 million compared with $10 million reported in the year-ago quarter.
In EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR surged 239.9% from the year-ago quarter’s level. ADR increased 49.3% and occupancy rates rose 36.6 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the first quarter came in at $13 million against a loss of $1 million reported in the year-ago quarter.
In the Apple Leisure Group (or ALG) segment, adjusted EBITDA during the second quarter came in at $54 million compared with $56 million reported in the previous quarter. Solid demand for leisure destinations, coupled with increased airlift capacity and a favorable pricing environment, added to the upside. During the quarter, the ALG segment added 10 resorts (or 2,502 rooms).
Balance Sheet
As of Jun 30, 2022, Hyatt reported cash and cash equivalents of $1,955 million compared with $1,305 million reported in the previous quarter. Total debt as of Jun 30, 2022, stood at $3,804 million compared with $3,821 million as of Mar 31, 2021.
The company stated undrawn borrowing availability of $1,496 million under Hyatt's revolving credit facility.
Other Business Updates
Coming to hotel openings, 28 new hotels (or 5,510 rooms) joined Hyatt's system in the second quarter of 2022. As of Jun 30, 2022, Hyatt executed management or franchise contracts for approximately 550 hotels (or 113,000 rooms).
During the second quarter, the company made significant progress with respect to its $2.0 billion asset disposition commitment. The company completed sale agreements for assets (valued at $812 million) related to its owned and leased portfolio. The properties include Hyatt Regency Indian Wells Resort & Spa, Grand Hyatt San Antonio River Walk, The Driskill and The Confidante Miami Beach. On Aug 3, the company entered into an agreement with an unrelated third party for the acquisition of Hotel Irvine (for approximately $135 million). The company is optimistic to realize approximately $2 billion gross proceeds from the sales of real estate (net of acquisitions) by 2024-end.
2022 Outlook
For 2022, the company expects adjusted selling, general and administrative expenses between $460 million and $465 million. Capital expenditures are projected at approximately $210 million. Unit growth in 2022 is anticipated at approximately 6% on a net-room basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 752.63% due to these changes.
VGM Scores
Currently, Hyatt Hotels has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Hyatt Hotels has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.